Brazilian Markets Plunge After Lula's Surprise Re-election Victory

Brazilian financial markets suffered sharp losses on Monday after Luiz Inácio Lula da Silva's unexpected re-election victory, with the Bovespa index plunging over 13% and the dollar surging 8.65% against the real. The market had confidently bet on challenger Flávio Bolsonaro's victory, ignoring poll warnings about a potential Lula comeback. The Ibovespa triggered a circuit breaker after falling more than 10%, while the central bank injected $3.75 billion in currency swaps and the Treasury repurchased bonds to stabilize markets. The government now faces fiscal challenges, including a R$39.8 billion budget overrun and a nearly 27% rise in country risk. Officials pledged to pursue the 2027 fiscal target of 0.50% of GDP, though analysts remain skeptical about spending controls.